Louisiana's state flag (Credit: Lousiana Secretary of State's office) Louisiana’s state flag (Credit: Lousiana Secretary of State’s office)

Louisiana’s Department of Health and Hospitals has paid out almost $2 million in Medicaid benefits for low-income residents who couldn’t use the cash — because they were dead.

A new report [pdf] from Legislative Auditor Daryl Purpera shows the state paid $1.85 million to several private firms administering Louisiana’s two Medicaid programs, Bayou Health and the Behavioral Health Partnership initiative, for 1,727 patients who were no longer among the living. The Department of Health and Hospitals pays a monthly fee to the private corporations for each eligible participant.

The state made three or more payments, totaling $1.75 million, on behalf of more than 800 people who had died, an indication that the department didn’t catch their errors for months at a time.

It’s up to the department to determine who is eligible, and to enroll those eligible in one of the two programs. More than half of the payments were made on behalf of 392 patients who died before Feb. 1, 2012, before the Behavioral Health Partnership began. The department, the auditor concluded, automatically enrolled participants eligible for Medicaid without properly verifying that they were still alive.

“DHH does not have a sufficient process in place for identifying deceased Medicaid participants in a timely manner,” the auditor wrote.

The amount spent is a relative pittance, less than one-tenth of 1 percent, of the overall payments the state makes on behalf of its Medicaid-eligible population. But Ruth Kennedy, the state’s Medicaid Director, said in a written response to the auditor’s report that her office will begin auditing its eligibility rolls on a more regular, quarterly basis. Kennedy’s office agreed with auditor recommendations that the department should reevaluate its procedures for identifying deceased Medicaid recipients.

DHH Secretary Kathy Kliebert told the Baton Rouge Advocate on Monday that the state had relied on “a very sloppy” Social Security database to determine eligibility. The state will start using its own vital records database to determine whether Medicaid recipients had died, she said.

The department told the auditor it will likely be able to recoup the money from the private companies.